Last year, feds were concerned about the unexpectedly slight savings in the new Self + 1 premiums compared to the Family premiums. There was quite a bit of commentary, but I did not see any satisfactory explanation.
So, how is it this year? Below I have listed the data by annuitant premium (monthly), from lowest to highest, national coverage only.
|Self||Self + 1||% Increase||Family||% Increase Over Self+1||Carrier/Option|
Note the sharp difference between the percent increases, by level.
Adding one person to Self only results in increases ranging from 75% to 145%, while adding one or more persons to Self + 1 raises the premium by just 16% or LESS (sole exception: APWU High, at 35%), including one decrease of 4.7% (NALC)!
Children are the primary additions to the Family level, and children are healthier with lower health costs than adults. This would cause Family to be lower cost per capita (i.e., lower premiums) than the other two levels.
However, this apparent advantage of Family would be more than offset by the fact that Medicare pays the hospital bills (and doctor bills, too, when there is Part B) of those who qualify for Medicare. There are approximately 1.9 million annuitants, annuitant dependents, and annuitant survivors under Medicare. Virtually all who were in Family moved to Self + 1, carrying with them the “Medicare dividend,” so this is a rather substantial offset to the cost of Self + 1.
Despite the strong countervailing effect of Medicare paying most bills, the glaring inconsistency between levels persists, i.e., premiums for Self + 1 are only slightly lower than Family premiums.
If there is a legitimate explanation for this inconsistency, why – considering the great interest by so many – has OPM not provided it?
In the absence of an explanation, it is not unreasonable to believe the FEHB insurance companies are simply being allowed to pocket the unearned premiums, instead of using them to lower premiums for all. If this is not correct, please advise.